France to Lead Havana Airport Renovation, Resolve Cuba’s Debts

The Cuban government announced yesterday that France will be involved in Cuba’s largest airport renovation.

The news comes a week after the announcement of the opening of a French Development Agency in Cuba for projects stemming from funds connected to Cuba’s debt settlement negotiations.

France is Cuba’s largest single creditor. Cuba’s bilateral creditors are different from the US claims issue that remains unresolved between the two countries.

Aeroports de Paris, the French government-owned firm that runs Charles de Gaulle, will receive a concession to operate Jose Marti that will include a renovation by the French firm, Bouygues.

There were previous reports that a Brazilian development agency would be involved in renovating Cuba’s airports.

What remains of Cuba’s debt to France has been under discussion for the last six months but appears now to have been concluded.

Bouygues is included in a sign posted outside the construction site of the new Hotel Manzana in Havana. (Simons Chase/Cuba Journal)

Last week, France officially announced the vehicle to finance various priority development areas in Cuba through long-term preferential loans. Cuban Foreign Trade and Investment Minister Rodrigo Malmierca and French Ambassador Jean-Marie Bruno signed an agreement for the opening of a French Development Agency in Cuba.

The agency will fund projects on renewable energy, tourism, transport, agribusiness, sanitation and urban development. According to official sources, a part of the financing will come from a fund of 231 million euros (about $258 million) created from the renegotiation of Cuba’s external debt with France and other members of the Paris Club of creditors. The US is not part of the Cuba Group of the Paris Club creditors included in this negotiation.

Cuba’s Relationship with the EU

The European Union (EU) and Cuba held seven rounds of talks—two in 2014, four in 2015, and one in March 2016—on a Political Dialogue and Cooperation Agreement (PDCA) covering political, trade, and development issues.

The new cooperation agreement, which has to be officially approved by EU governments, would replace the 1996 Common Position.

In 1996, the EU adopted a Common Position on Cuba, stating that the objective of EU relations with Cuba included encouraging “a process of transition to pluralist democracy and respect for human rights and fundamental freedoms.” The position also stipulated that full EU economic cooperation with Cuba would depend upon improvements in human rights and political freedom.

Trade relations / Foreign Direct Investment (FDI) flows

The EU is Cuba’s main export and second trade partner after Venezuela. Its main export goods are mineral fuels and mineral oils, sugars, beverages and tobacco. In 2015, Cuba exported €540 million to the EU and €465 million in 2014.

As a result of the EU’s Generalised Scheme of Preferences (GSP) reform in January 2014, Cuba lost its trade preferences for exports to the EU. This had an impact on their tobacco exports, mainly, for which the customs duty increased considerably.

The EU exported €1.600 million in 2014 (mainly machinery) to Cuba. The PDCA mainly aims to create a more predictable, transparent environment for economic operators, and to increase the capacity of economic operators to produce and trade, but does not establish a free trade area between the parties, nor does it cover investment protection.

The EU is also the biggest foreign investor in Cuba (mainly tourism, construction, light and agro-industries) and accounts for a third of the arriving tourists.

EU-Cuba development cooperation

Bilateral development cooperation resumed in 2008, and between then and 2014, the EU committed around €90 million in the area of food security; hurricane response and disaster preparedness; environment; climate change and energy; culture and heritage; support to economic and social modernization and management capacities.

Cuba also participates in EU regional programmes for Latin America for student exchange (e.g. ERASMUS Mundus), cooperation on drugs policies, also on environment and climate change.

The EU allocated €50 million from 2014 to 2020 to support the island nation’s development by promoting sustainable agriculture and food security; environment; and support for economic and social modernisation.

An example of an EU-funded programme is the Expertise Exchange Programme (EEP). The EEP has a budget of € 3.5 million and will be implemented until 2017. It has supported over 80 activities involving more than 1200 Cuban public officials and more than 50 experts and/or public servants from Europe and other countries in the areas of Decentralisation, Public Policies, Tax Administration, Foreign Investment and External Trade contributing to the 2030 Cuban Development Strategy and accompanying the process of “updating” the Cuban economy and society.

France to Lead Havana Airport Renovation, Resolve Cuba’s Debts was last modified: August 4th, 2016 by Simons Chase